Australian costs per ton improved by 24% to a record low in 2015, helping the company achieve $620 million in cost improvements. But this could not compensate the company for the $450 million in lower pricing and $387.2 million in hedge losses compared to the prior year.
The adjusted EBITDA also includes $23.5 million in charges related to reductions in corporate and regional staff and Australian mining operations.
Peabody CEO Glenn Kellow said: “Against a brutal industry backdrop, the Peabody team delivered a strong operating performance as we improved safety, achieved over $620 million in lower costs, further reduced capital, streamlined the organization and advanced multiple work streams to address our portfolio and financial objectives.
“It is clear that more must be done, and we are taking further steps to confront a prolonged industry downturn by targeting additional cost reductions, advancing non-core asset sales and pursuing aggressive actions to preserve liquidity and delever our balance sheet.”
Revenues for 2015 totalled $5.61 billion compared with $6.79 billion in the prior year due to lower realized pricing in the US and Australia and a 21.0 million ton decline in sales.
Australian metallurgical gross margins were adversely impacted by over $2.50/t from the Burton mine, the company's only contractor-operated mine.
Australian volumes decreased to 35.8Mt and included 15.7Mt of metallurgical coal sold at $75.04/t and 12.6Mt of export thermal coal at $53.76/t, with the remainder delivered under domestic thermal contracts.
Loss from continuing operations totalled $1.86 billion compared to $749.1 million in the prior year. Operating cash flows reflect a usage of $14.4 million as cash generated by the operations was not sufficient to cover cash interest and health benefit trust payments.
Proceeds from property disposals generated approximately $70 million in cash, while capital spending of $126.8 million was at the lowest level since 2001.
Peabody has lowered 2016 US sales guidance by 18 to 28Mt below 2015 levels. As a result, projected 2016 US production is now fully priced, with 2017 production 35 to 45% unpriced based on targeted 2016 production levels.
After incorporating deferrals to later periods and a change in customer mix, Peabody now has 116Mt of PRB priced for 2016 delivery at an average of $13.30/t.
US revenues and costs per ton targets in 2016 primarily reflect a reduced proportion of PRB sales compared to 2015. In the PRB, the company is working to optimize production levels and mix at the North Antelope Rochelle mine to maximize margins.
Guidance for 2016 includes the contributions from mines in Colorado and New Mexico, for which a sales agreement is in place.
In Australia, Peabody is lowering targeted metallurgical coal production levels in 2016 to reflect operational changes made in 2015, which is expected to result in lower PCI sales.
Peabody expects first quarter adjusted EBITDA to reflect current reduced seaborne coal pricing, lower PRB volumes, the impact of planned longwall moves at the Wambo and Twentymile mines, and the realization of fuel and currency hedges that are expected to improve each quarter as the year progresses.
“While cost improvements continue to remain a priority for Peabody, current pricing levels are a strong headwind,” the company said.
“The company also expects to have an approximately $70 million benefit to continuing operations from the recently amended 2013 agreement with the United Mine Workers of America.”
